Lufthansa Shares Lower on Tuesday
Shares in German airliner Lufthansa are trading down a little over 1% pre-market on Wednesday. The airline, which is the largest in Germany, has recently announced plans to make further cuts.
In a staff briefing, which was reported on by Bloomberg, the airline’s CEO Carsten Spohr warned that the airline would need to brace itself for heavy cuts among staff and fleet alike.
Spohr cited the negative impact of quarantine rules as the key driver for the requirement to make further cutbacks. He warned that the rules “have had a catastrophic effect on bookings” adding that “for October, seat reservations stand at less than 10% of a year ago”.
Travel Won’t Recover Until Mid Decade
Looking ahead, the company’s outlook is bleak. They warned that it could take until the middle of the decade for travel levels to return to normal. One of the key challenges facing Lufthansa is that it relies heavily on business customers. Given that the corporate landscape has shifted so dramatically, it has suffered a massive loss of demand among this clientele.
In terms of the cuts likely to be made to Lufthansa’s fleet, Spohr said that existing four-engined B747-400s and A340-600s would be retired provided Airbus can expedite delivery of the A350s it has ordered.
The big question mark, however, hangs over the remainder of the airline’s A380 fleet which had previously been expected to return to service in 2022. On this matter, Spohr said “we will decide next week if more A380s are phased out. And more would mean all”.
Third-Party Booking Fees Hiked Again
Lufthansa has also made headlines again this week with news relating to its third party booking fees. Five years ago, Lufthansa became the first airline to add a surcharge to bookings made with third-party vendors.
The group now confirmed that it will increase this surcharge. This is in a bid to drive more direct bookings through the company itself.
Starting from October 1st, customers will face an additional $21 fee in the US and a 19EUR fee in Europe. This is up from the prior $16 fee. The spike in surcharges comes as Lufthansa continues to pour more money into refunds. The group confirmed it has currently refunded over $3 million in funds to over 6 million customers. They have a further $1 million transactions left to settle.
Lufthansa Remains Rangebound
Shares in Lufthansa continue to trade within the middle of the long term bearish channel with volatility having significantly weakened over recent months.
To the upside, the main level for bulls to break is the 12.55 region where we also have confluence with the bear channel top.
To the downside, the first support is at 7.024. This is ahead of deeper support at the 4.348, ahead of the bear channel bottom.